Thursday, June 18, 2009

I keep hearing stories of bored entrepreneurs buying up blocks of homes at a time in order to "hire a management company and rent them out!" Oh, if it were only so easy. Unfortunately, not all management companies are created the same. Last year I had to fire one for a variety of reasons including incompetence, unprofessional behavior and hiring shoddy subcontractors (in fact, I was thinking of pitching such a cautionary tale to the L.A. Times, but once I hired a new company I just wanted to be past the experience). But at least my property is local!

Newsweek writer Daniel McGinn, however, author of the book "House Lust," jumped on that out-of-state bandwagon a few years ago, buying up a duplex thousands of miles from his home in New York, and he's written a story on how that experience made him 'the accidental slumlord.'

Four years ago, at the height of the boom, I visited Pocatello to write a story for NEWSWEEK about how out-of-state investors had begun buying cheap rental properties there, drawn by ultralow sales prices and a solid rental market. (At the time, the average Pocatello home sold for just $98,000.)

A year later, while writing a book about the housing boom, I decided to dive in myself. In late 2006, after seeing only e-mailed photos, an appraisal and an inspection report, I paid $62,750 for a two-unit rental property in Pocatello, which is 2,450 miles from my Massachusetts home. I didn't expect to get rich; my main motivation was to have a good story for the book.

By that measure, the deal was a success; when House Lustcame out in 2008, the chapter in which I described my early misadventures as a property magnate (an early tenant went to jail; my first property manager made off with $1,300) helped fuel reviews and interviews. But now, long after the buzz over the book has died down, I'm stuck with a house in Idaho—and friends who call me a long-distance slumlord...